Bangladesh economy is now passing through a difficult time with enormous challenges ahead. The spiraling price hike of essentials and increasing inflation are currently the biggest pressure on the economy. The unabated price rise has put under threat the impressive achievements made after January 11, 2007. The government should,therefore, look into the matter immediately and continue to maintain a liberal import policy as a short term measure, particularly for food grain import to keep prices under control said International Chamber of Commerce (ICC) Bangladesh, The World Business Organisation in the Editorial of its Quarterly News Bulletin released on 9th October.

No doubt, the present government took office with a strong popular support to hold a credible national election, improve law and order, fight corruption and strengthen governance. Almost 100% public acceptance of this government with full respect at the beginning is now perceived to be on the decline in the public mind mostly due to spiralling prices of food and essential commodities even though the government has limited option to intervene in a free market econonmy, except fiscal intervention and law and order situation, which of course it is doing.

The current reform measures, including drive against rampant corruption, are very much welcome but unlikely to yield immediate results. The benefits will,however, come in mid- and long-term. But the steps now being taken would definitely contribute in forming a strong base for the future economy.

Notwithstanding a number of internal and external factors afflicting the country’s economy, impressive disbursement of term loans during the last fiscal has led to moderately high growth in the manufacturing sector. Robust export growth, buoyant inflow of remittance and improving port situation has signalled strengthened performance of the external sector. Invigorated capital market and increasingly competitive telecom market stood out as positive outcomes of the economy in FY2007.

The balance of payment situation of the country is also in a very good position. Official remittance from the expatriates in the preceding year has reached about US$6 billion, which has certainly provided a big cushion to the Balance of Payment (BoP) situation in FY07.

On the other hand, narrow export basket of Bangladesh is likely to face heightened competition as the EU restrictions on RMG export from China will be withdrawn from day 1 of 2008 while US restrictions will go from January 1, 2009. In this new competitive scenario, sustaining the current high export growth will be an uphill task in coming years. Although the annual export earnings have already reached $12 billion and expected to reach US$ 16 billion in the next two years.

The government’s target of 7 per cent GDP for the current fiscal couild be possible only if the three major components of GDP, viz. Agriculture, Industry and Service sectors enhance their contribution further to attain this optimistic target. Recent slowdown in the growth of gross capital formation and slow private investment, however, does not invoke much optimism in this regard. ADB has expressed the fear that GDP may fall to 6.5 per cent due to flood, while inflation and budget deficit may go up. It is estimated that an additional investement of Tk. 200- 250 billion will be required to attain the projected GDP of 7 per cent. The businesses reietrates their earlier suggestions of ensuring an enabling environment for investment including favorable cost of capital.

The challenge for the government is, therefore, to win the confidence of the business community in particular and the public in general. Businessmen should be allowed to manage their affairs with ease and make their own investment decisions. On the basis of faced realities or perceievd ones, it is not that business want anti-corruption drive to stop, but they expect this to be done with due care and of course without creating a “panic” situation and thereby impacting the entire business activities of the country.